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CNN Sunday Morning

Interview With Jay Foley, Ed Mierzwinski

Aired September 01, 2002 - 11:15   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

FREDRICKA WHITFIELD, CNN ANCHOR: Identity theft is a serious and growing problem in the United States. One option to perhaps protect yourself, identity theft insurance. Is it really a good idea? Joining me now to talk about some of the pros and cons of identity theft insurance are Ed Mierzwinski with the U.S. Public Interest Research Group -- he's in Washington -- and in San Diego, Jay Foley with the Identity Theft Resource Center.
Thank you, gentlemen, for joining us.

JAY FOLEY, IDENTITY THEFT RESOURCE CENTER: Thank you, Fredricka.

WHITFIELD: All right, Jay, let me begin with you. That's just one more thing we need, yet one more insurance policy. Why do you suppose insurance is the way to go to protect ourselves against your identity being stolen?

FOLEY: Well, it's not -- the best way to describe it is for the cost, it's going to be a very effective tool to help you.

WHITFIELD: How?

FOLEY: It's going to supply you with funds that you're going to need for covering the copying, the phone calls, the various expenses that you're going to incur trying to clean up the mess. Most victims of identity theft on an average case are going to spend around $1,000 out of pocket trying to deal with the matter that's been created for them.

WHITFIELD: All right, well, Ed, let me bring you in on this. There are a lot of credit card agencies that offering protection plans for this very reason. How is that going to be any different -- or how is that comparable perhaps of different from, you know, insurance for identity theft?

ED MIERZWINSKI, U.S. PUBLIC INTEREST RESEARCH GROUP: Well, the credit card companies and the credit bureaus that are offering free -- quote/unquote -- "free credit report" teaser services for a couple of months because they want you to sign up for $80 or $100 a year programs to look at your credit report. In fact, if you're a victim of identity theft or suspect you are, you're entitled to look at your report for free.

The insurance is something completely different. The insurance is meant to cover out of pocket expenses. It's meant to cover your lost wages. I'm skeptical on whether it is covering it. By the way, Jay's group and my group, we agree on almost everything relating to identity theft. On this particular issue, I just am not sure identity theft insurance is working, but I'm not going to stop somebody from paying $25 for the peace of mind. I'd like to hear from victims around the country whether it's actually working.

WHITFIELD: So Jay, how do you see that this will eventually help ease the headache and the heartache and save people money when you already have to put out somewhere between $20 and sometimes even $100 to secure the insurance?

FOLEY: Well, so far, it's -- what we're hearing is the insurance runs between $25 and $40. The $100 programs that you're hearing about are credit-monitoring services, which, as Ed mentioned, they're different than the insurance. It's going to help the victim at the time by compensating him for all of the expenses that he's going to incur. The big benefit that we're looking for down the road is if the insurance companies start paying out a lot of claims on this -- on the identity theft insurance. They're going to start mentioning it to the credit industry, which may modify the way they do business.

WHITFIELD: So what's your advice? How do you shop around? How do you -- how can you tell whether this is a legitimate offer from a legitimate company offering you insurance, or if this is a scam?

FOLEY: Well, first of all, currently, I'm only aware of three or four companies that are offering this and they're all offering it as attachments on to your homeowner's insurance. Chubs, The Hartford are two of them. If you're not using them for homeowner's insurance, than you're probably not going to be able to get it.

WHITFIELD: Well, Ed, do you worry, that hearing partial endorsement of certain insurance policies for identity theft might mislead people who are getting a phone call from someone who are offering a very similar package? Do you worry that certain people might be taken advantage of?

MIERZWINSKI: I -- absolutely -- I think there will be scams out there, but if you're buying your insurance from somebody like Travelers, it's probably -- I mean it's obviously a legitimate product. The question is down the line, I'm hoping -- I'm hoping for the day when the insurance company starts suing the banks. And say, Citibank is responsible for your identity theft. Will Travelers sue its affiliated company, Citibank? Well, that remains to be seen. But Jay's exactly right.

In the short run, consumers are going to get some of their expenses paid, the cost of getting notarized statements and of affidavits, possibly their out-of-pocket expenses. The companies claim they'll even pay for your lawyer. I'd like to see the insurance companies start suing credit bureaus. That would be the big step forward that would really help identity theft victims because the credit bureaus are really the problem. They and the credit card companies continue to make it easy to obtain credit in your name with just your social security number.

WHITFIELD: So what would be your advice to consumers on how might they be able to protect themselves, when they're hearing about all these options, about insurance, if your advice is -- don't necessarily get go out and get a separate insurance policy though, what kind of questions do they need to ask? What can a consumer can do to protect themselves?

MIERZWINSKI: Well, I think, as Jay pointed out, the exact thing is first; get something that's a rider on your existing policies. Look for a very low deductible. Look for a fee of $25 as a rider with a $100 deductible. Anything more than that, you're probably being ripped off. And second, be very careful with your information. Look at information on identity theft, shred your documents, take your social security number off your driver's license, cancel credit card solicitations, just be wary that identity theft could happen to you. But keep in mind that the credit card companies are responsible for paying off the losses on your credit cards that aren't really your credit cards, the cards opened in your name that are fraudulent accounts. You're not liable for those, but the hassle, the time, the problem, the emotional trauma; those are the problems you have to face if you get caught with identity theft.

WHITFIELD: And Jay, in your view, are there certain consumers that are going to be more vulnerable or more susceptible to identity theft?

FOLEY: Unfortunately, with this and going with the idea of an identity theft insurance scam, unfortunately, the seniors are going to be the ones that are targeted. They should be devilry diligent about what they're looking into, what they're purchasing, and what they're agreeing to.

WHITFIELD: All right, thanks very much. Jay Foley and Ed Mierzwinski, thank you for joining us.

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